US Treasury disputes EU decision to list Guam on tax haven blacklist

Posted On: January 7, 2018

The U.S. Treasury Secretary is disputing a decision by the European Union to place Guam, and American Samoa, on its blacklist of noncooperating tax jurisdictions.

In a letter to EU Secretary General Jeppe Tranholm-Mikkelsen, U.S. Treasury Secretary Steven Mnuchin wrote that “there is no basis for concluding that American Samoa and Guam have any role in promoting the evasion or avoidance of taxes imposed by European Union member states.”

In his letter, Mnuchin counters that “the United States has full confidence in American Samoa, Guam, and all of the U.S. territories; their tax administrations; and their compliance with international norms with respect to taxation.”

BEPS stands for “base erosion and profit shifting.” It refers to tax avoidance strategies that exploit gaps in tax rules to shift profits to low or no-tax locations. The OECD convention is a multilateral agreement among participating members to combat tax evasion.

Mnuchin points out that Guam and the other American territories are already bound to international tax standards through the United States. “The commitments and actions of the United States in implementing BEPS minimum standards extend to the U.S. Territories,” Mnuchin wrote.

The letter underscores the close connection between the legal framework in the U.S. territories and the United States as a whole. Mnuchin called on the EU to “reconsider” its decision to analyze the territories separately, and its decision to include American Samoa and Guam on its list of noncooperative tax jurisdictions.